All Topics / Creative Investing / subdivision loan restructure selling half of existing property to build new

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  • Profile photo of admoadmo
    Participant
    @admo
    Join Date: 2008
    Post Count: 1

    Hi all,

    brand new here, but complex idea.

    basically heres the story in a nut shell

    have a house with family history large block 1700sqm. mortgage of 200k worth 400k
    think i can get a subdivision through council

    heres what i want to do.

    build a new house on new block as ppr for about 350k on block that would be worth over 150k
    ideally keep existing house rent out as ip – but dont fancy the cash flow risk at this time in life (new baby. yay)
    this may be possible if we build a cheaper place on the new block, but its got history and its a great spot so thinking a nice split level place would be great. We could do this if we sold the existing (prefer not too as its a family property 1950, perfect rental, renovated asbestos fibro – with asbestos removed replaced with weathertex weatherboard).

    Creative idea.

    Sell 50% of existing house to parents (provided this is good for them, they think it might be – buy throuh their own superfund?) after subdivision goes through

    keep current mortgage of $200k on 50% of property and only take 200k from parents plus new 150k loan to build $350k property next door. maintain old house as ip at 50%. due to negative gearing, this helps cash flow.

    problems:

    Is this legal? want to do the right thing – obviously and would it still be legal if for example i had 250k mortgage on 50% of existing property valued at 400k (i.e. 200k). mortgage is more than the equity, but fine considering my other assets?

    if anyone gets through all that and it makes any sense, then i would love to hear your ideas.

    Thanks

    Profile photo of quickchickquickchick
    Member
    @quickchick
    Join Date: 2004
    Post Count: 168

    I doubt that your parents can buy part of any house with super funds. There are strict laws around super loans. maybe they could buy the family home, and leave you free to sub-divide and build? Definitely need to ask your accountant about this one!

    To sub-divide, I think you'll need to have building plans drawn up (check with council).

    Quickchick.

Viewing 2 posts - 1 through 2 (of 2 total)

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